We need to talk about Merchant Adoption and Spend & Replace

I think all Bitcoiners universally agree that Bitcoin will not have reached its full potential until it is used for most transactions globally. It is very logical to work backwards from that end goal and realize that Merchant Adoption is a huge stepping stone in that direction... Universal Bitcoin adoption requires universal Merchant Adoption - Everyone agrees on this point. The problem lies in the roadmap to achieving universal Merchant Adoption.

The status quo solution (in BCH community) for spreading adoption is "Spend & Replace" at merchants. The idea is that you simultaneously spend $20 of Bitcoin at a merchant, and replace it through Coinbase. The theory is the more you spend Bitcoin at merchants, the more merchants will accept Bitcoin. The more merchants that accept Bitcoin, the more attractive it is to use in payment, thus a positive feedback loop occurs. This is all perfectly logical reasoning.

The "Spend & Replace" solution falls short for 2 reasons:

1. What incentive does Average Joe have to adopt "Spend & Replace" Bitcoin evangelism? Average Joe is still purchasing the exact same product, at the exact same price. In addition to paying the exact same price for the product, Average Joe is significantly inconvenienced. Joe has to send fiat to Coinbase. Buy Bitcoin on Coinbase. Transfer the Bitcoin to his very confusing Bitcoin wallet. After transferring to his Bitcoin wallet, the Bitcoin may go up or down 20% before he spends it. Why is Joe going to go through 5 extra steps, and endure Bitcoin price volatility, all to purchase the exact same product at the exact same price as a credit card?
2. In virtually all cases, the merchant is not actually adopting Bitcoin. The merchant is simply syncing a point of sale exchange to convert your Bitcoin to fiat. This can be done 100% on the user's end without involving the merchant at all. Even when involving the merchant, the merchant never touches the Bitcoin at any point in time. What most people call "Merchant Adoption" is really just synchronized sales of Bitcoin to give the appearance of "Merchant Adoption." The merchant at no point is ever holding Bitcoin. This form of Merchant Adoption is really just feel good adoption.

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I am not advocating that people stop Spend & Replace. If you want to Spend & Replace, more power to you. I am simply making the argument that spend & replace is:

1. Not an attractive use case to Average Joe
2. Even if Average Joe finds it attractive, it's not actually increasing "Merchant Adoption"

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If we are going to persuade Average Joe to adopt Bitcoin, it must save him at least 10% over legacy services, or else he isn't going to switch. The only two use cases of Bitcoin which can enable Joe to save 10%+ over legacy services are:

1. Free Trade without extortion
2. Free Trade without arbitrary rules

My proposal is described here: https://drive.google.com/file/d/1SnRdVeGoPkkdk2lXtdjDfy7c0z1ZlmRE/view?usp=sharing

Would love to hear other proposals.

submitted by /u/guyfawkesfp
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source https://www.reddit.com/r/btc/comments/bs7els/we_need_to_talk_about_merchant_adoption_and_spend/